Saturday, March 14, 2009

Here's the problem - in thirty short seconds

I watched a Ford commercial on television and thought that it perfectly captured the blind eye many of us seem to be turning to the root of our financial catastrophe: spending beyond our means.

In a effort to motivate buyers, Ford is offering to make the first three payments for you on your new car. That's three months without a car payment while you drive around in your new car! WOW!!

What happens in month # 4 is anyone's guess. Here's my stab at it: if you finance a car and can't afford to make the payments each month, no matter how many times someone pays it for you, you won't make the first payment that comes due under your watch. In this case, in month # 4.

But wait - there's more to the offer. To help you actually feel like you can afford the car you want, Ford will help lower the monthly cash outlay by extending your credit/loan on the car for 72 months. Yes, that means just SIX short years later you can own a car that is by then close to seven years old.

Isn't Ford's promotion more of the same problem that got us into this mess? Overextending ourselves and our credit to finance a lifestyle or products we couldn't afford?

I'd like to see a major manufacturer, whether it's a car company, an electronics company or other fairly high ticket commodity try to do the responsible thing here.

Let's review the real offer Ford is making to consumers who don't have clue one about how to be responsible with money:

"Hey! We're going to make it easier than ever for you to come on in and buy a new Ford. We'll make the first three payments for you - and that means we'll pay $XXX a month for three months (disclaimers clutter the bottom of the screen at this point.)

After that, you owe $XXX for the next 69 months to own this car. That's right, in the middle of 2015 you will finally be finished paying off this car!

Yes, your insurance will also cost more on a new car, of course, but let's not think about that right now. Let's concentrate on putting you in a brand new car!!!"

I'd love to see someone make a commercial that delivers this kind of message:

"Hey - we're Ford and we make cars for a variety of budgets. If you want to spend $xxx a month and finance your car for 36 to 48 months with no down payment,and you have good credit and your monthly income is $XXX, come into one of our dealerships and take a look at these models. Let's discuss your monthly bills but it's possible one of these models won't break your budget.

"Here's a way to tell if models like the ___, ___ and ___ are good choices for you: your weekly paycheck should put at least $xxx in your pocket. And your weekly expenses should leave you with at least $XXX left over to put toward a car payment.

"We know there's a lot to think about when buying a car - and committing to that payment each month. Come in and talk to us - if the numbers add up for both of us, we'll put you in a car you can afford.

And that's the best offer there is out there today."

I'm not holding my breath.


Richard said...

Great observation. Don't people hate owing money anymore? I struggled to pay off my mortgage early, and have only one miniscule car loan. (I put about 50% cash down.) I think people are too far removed from the "Great Depression." I learned a lot about financial responsibility from my parents, both of whom were born before 1920. The people that are getting in over their heads are a generation removed any relatives that grew up in the 1930's.

Did the children of depression-era people fail to instill appropriate values in today's citizens? That is, the grandchildren of those who grew up in the depression don't seem to get it. I tried to teach my son some fiscal responsibility, but I'm not sure he got it. Not all of it anyway.

Although Ford makes it look attractive, no one is forcing consumers to buy the cars. Just like no one forced lots of people to buy houses they can't afford. Normally, I'd just prefer to say, "well they got into the mess, they just have to pay the consequences." But now, as a taxpayer, I am being forced to be part of the bail out. I played by the rules all my life, paid my loans and taxes, what do I get? Actually, I don't want to get anything, nobody owes me a "bail out" or reward. However, I'd just like to be left out of fixing other people's self-inflicted problems.

renee said...

thank you!

And to answer your question: no one minds being in debt. Especially since they will never pay it off. It's invisible that way, and sadly becomes your problem or mine in today's failing economy. That's the part that aggravates me, too. I never wanted a parade either for practicing fiscal discipline. But I also never planned on losing "safe" money I had responsibly saved for "the future" because too many people (on both sides of the loan officer's desk) decided to be irresponsible.

Infuriating is you ask me.

Thanks for your comment -